The growth of the IT sector has been partly overshadowed by the liberalisation of the telecoms industry. However, the arrival of major international telecoms players has opened up significant new opportunities for Myanmar’s expanding tech market. Yet this has also put some strain on the country’s internet capacity as a population of more than 51m gradually gains access to the web, mostly for the first time, on their mobile phones.
The evolution of Myanmar’s telecoms industry has amplified the aspirations of its growing number of tech graduates and digital entrepreneurs. With an increasing amount of interest targeted towards areas such as computer programming, software development and online media, the youth of Myanmar are positioning themselves to capitalise on the modernisation of the economy. However, a lack of necessary infrastructure and an historically neglected education system continue to hinder growth. However, the easing of censorship and increased enthusiasm for investment is quickly narrowing the technology deficit.
Prospects for tech entrepreneurs have grown substantially as the economy is reformed and opened up to foreign investment. “The new telecommunications law has helped the IT industry a great deal, and the entrance of international operators has allowed local small and medium-sized enterprises (SMEs) to assist in the advancement of Myanmar’s economy,” U Minn Thein, co-founder and chief administrative officer of Frontiir, a local internet service provider (ISP), told OBG.
When the military government decided to open the country to the outside world in 2011, overall internet penetration stood at just 1%. According to World Internet Stats figures, in 2012 there were approximately 534,930 internet users, with 98.13% of these users based in the business capitals of Yangon and Mandalay. Although the first connection was established in 2000, progress was subdued due to a limited amount of public spending on technical infrastructure and the fact that what little access was available was closely monitored by the military. As a result, internet access was slow and came at a high cost. In addition to those shortfalls, power outages and heavy rainfall during the monsoon season continue to make cross-border terrestrial fibre networks sluggish.
For the most part, mobile phones have played a major role in easing connection problems, but more needs to be done to diversify Myanmar’s underlying international links. The country has relied mostly on two cables for the last 15 years: one overland cable to Thailand and the other a sub-sea cable, known as the South-East Asia - Middle East - Western Europe 3 (SEA-ME-WE 3). Commissioned in 2000, the subsea cable connects Myanmar to 38 landing points around the world using wavelength division multiplexing technology with synchronous digital hierarchy transmission, which translates into 10 Gbps. There is also a terrestrial link to China, but it has been disabled numerous times due to the monsoon, with this often resulting in a lengthy disconnection. Myanmar was excluded from the submarine cable SEA-ME-WE 4, which is the primary internet backbone between Southeast Asia, the Indian subcontinent, the Middle East and Europe, due to the former military government’s inability to pay its share for SEA-ME-WE 3, which Myanmar Post and Telecommunications (MPT) must now pay back. Any disruption in either the overland or subsea cables noticeably affects Myanmar’s connectivity.
In late 2013, as part of an attempt to prepare the country for hosting the South-east Asian Games, MPT doubled the bandwidth on the cross-border cable with Thailand, which has proved to be a valuable investment for the country, although disconnects in either cable still create major download delays. The network’s backbone is due to get stronger as Myanmar is set to be connected by another subsea cable, the similarly titled SEA-ME-WE 5, which will stretch 20,000 km from Singapore to France, connecting 17 countries along the way. Transferring 100 Gbps, the new cable will be 10 times the speed of the SEA-ME-WE 3, and is earmarked to be completed in early 2016. The country is also reported to be joining the Asia-Africa-Europe-1 (AAE-1) cable project, which traces a similar path to the SEA-ME-WE 5. However, by December 2015 no official statement had been made about Myanmar joining the AAE-1 project.
According to sector reports since late 2014, 45 ISPs have applied for licenses, with more than 12 issued by August 2015, consisting of four tower companies, two fibre-optic network providers and six infrastructure companies. Prior to the easing of entry levels, broadband distribution was dominated by four firms, three of which are closely linked. First, MPT, which falls under the Ministry of Communications & Information Technology (MCIT), is both the policy maker and regulator for all issues related to telecoms and IT. The second is Yatanarpon Teleport (YTP), partly owned by MPT, and the third is Redlink which was formed under the guidance of YTP. The last to join prior to the market liberalisation was SkyNet. According to a 2013 report by Redlink, SkyNet had the least market share at 11%, while next in line was YTP with 24%, then MPT with 27% and Redlink with 38% market share, for a combined total of 30,824 broadband subscriptions.
According to World Bank estimates, fixed broadband internet subscribers in Myanmar reached 143,600 in 2014, and by August 2015 broadband penetration had passed the 1m mark, or 2% of the population, in comparison to neighbouring Thailand which stood at 8.4% of population.
Increased ISP competition has dramatically increased access points and led to a drop in prices. In 2012 it would cost as much as $500 to install a phone line, with an additional $1000 for an ADSL installation with a monthly fee of around $600 to $700 for a service which had many complaints.
Major strides have been made to promote connection speeds. Sticking with cable initiatives, foreign enterprises are also eager to assist in improving download speed, which averaged 5 Mbps in mid-2015 ranking Myanmar 159 out of 198 countries in comparison to Singapore, which has an average speed of 131.84 Mbps. One example is Benchachinda Holding Company from Thailand, which has formed Myanmar Information Highway Limited (MIH) along with four other companies. MIH is set to lay fibre-optic cables across Myanmar, starting with Yangon, in an effort to boost broadband connectivity with a target market of medium- to high-end hotels, financial institutions and households. The plan is to link MIH with the United Information Highway network in Thailand, which has an average download speed of 20.94 Mbps. Another example is Vietnam’s FPT, which was granted a 15-year network facilities service license by the MCIT, allowing the Vietnamese firm to offer fixed telecoms and internet services.
While foreign investment has become common in the once isolated state, the landmark entrance of Microsoft is seen as a critical step in the advancement of the country’s technology potential. By the end of 2015 the American corporation had inked two deals in the country. The first was with Kanbawza Group of Companies, Myanmar’s largest conglomerate, with the aim of upgrading the company’s IT systems, with particular focus aimed towards the group’s KBZ Bank, which looks to compete with nine foreign banks that were granted operating licenses in late 2014. The second deal was signed with local conglomerate Shwe Taung Group, a leading property developer, which will allow the company access to tools such as Windows 10 Enterprise and Office 2016 Professional through Microsoft’s sole licensing partner, Myanmar Information Technology.
Bridging The Gap
Strategic measures have also been taken to ease the traffic flow on the existing network. Both Telenor and YTP launched Google Global Cache (GGC) in 2015, a server that will keep data within Myanmar as opposed to downloading from outside the country, creating a shortcut to websites allowing faster downloads. MPT has linked with Korean company CDN etworks, which offers a service similar to GGC. Industry experts are calling the arrival of these hosting servers a major milestone for Myanmar’s ICT sector.
Locally hosted websites have risen dramatically in recent years, which have made for a more efficient internet environment. The amount of domestic sites went up more than 300% from Q3 2013 to Q3 2014. The increase in national content is also improving the overall experience because these sites offer faster access than external sites.
In addition to these sites, efforts to establish Myanmar’s first national satellite is expected to boost broadband speeds and improve security. The MCIT tender for a satellite is being advised by global players SatConsult and Euroconsult, who are assisting the government’s selection process. 15 companies had submitted bids by November 2015, and according to local media reports the list has been cut down to four potentials who have offered either to provide capacity on satellites already in the sky, or on satellites yet to be launched. According to SatConsult estimates, current satellite usage stands at 1418 MHz, with demand expected to increase 36% to 1930 MHz between 2015 and 2019, then up to 2458 MHz in 2029.
For a country that was virtually unconnected until recently, the speed of social media account subscription uptake has been striking, as can be seen in the rapid surge in Facebook users, which reached 7.1m by November 2015. According to estimates from Telenor, data usage increased almost 200% from January to June 2015. During that time the data used was 43% for browsing, 24% for Facebook, 14% for streaming and 19% for gaming and other uses. According to another survey by Mileage Communications Myanmar, 71.3% of the respondents subscribe to Facebook, while 25.7% use Gmail and 22.8% use Google Talk.
According to Daw Amy Nyunt, managing director of Netsmart Myanmar, the popularity of social media websites has played a major role in facilitating emergency response. “The recent floods show that connectivity has improved. Information is much faster, which has enabled aid workers to assist the affected much quicker in comparison to Cyclone Nargis in 2008,” she told OBG. During the monsoon season in 2015, 12 of Myanmar’s 14 states were flooded, damaging crops and seriously impacting the livelihood of 70% of the population, who depend on the agricultural sector in rural areas. In contrast to previous disasters when word spread slowly to rescuers, the recent catastrophe quickly spurred the support of local and international groups through the online “#SaveMyanmar” campaign. Of the 138 donation groups, 103 had Facebook pages, while hashtags # supportMyanmar, #saveMyanmar and #prayforMyanmar were tweeted over 57,000 times in one week.
While the market is ripe for the arrival of tech start-ups, new businesses still struggle to launch. This is due largely to the fact that access to inputs such as capital and land are difficult to acquire, with loans at local banks historically offered at 13% interest and recent increases in property prices. Yet with the advent of microfinance and the liberalisation of the financial services industry, many believe that small and medium-sized enterprises will be better positioned to benefit from the expansion of the sector. Although challenges remain, U Zaw Naing, managing director of Mandalay Technology, told OBG “The size of the market is huge and there has been very rapid penetration in terms of technology, but local companies are yet to capitalise fully due to limited financial and skill capacity, resulting from decades of limited exposure.”
Due to a lack of exposure and limited soft infrastructure, the industry has a lot of ground to make up in terms of keeping valuable data secure. “The country is behind in terms of IT security but strides are being made,” U Minn Thein told OBG. “The slow connectivity in the past actually acted as a deterrent to potential hackers. Now that the speed has increased, along with activity, there is more need for IT security,” he added.
In an effort to combat future cyberattacks, the MCIT has set up the Department of Information Technology and Cyber-Security. This has come at the right time for the financial services industry, as most banks have recently started to offer online banking options. According to officials from the MCIT, the department is made up of MPT representatives that specialise in e-government activities and will collaborate with international organisations and professional bodies.
Due to the lack of copyright laws and intellectual property rights in the country, pirated software is widespread, with local sources estimating that more than 90% of systems have copied programmes. Regrettably, even new computers bought from licensed dealers in the business capital of Yangon can be riddled with hijacked programs, damaging the integrity of any purchase guarantees and making the software vulnerable to attacks. Daw Amy Nyunt told OBG, “Most local businesses operate pirated software; aside from the legal issues, the most pressing challenge is the lack of technical assistance from the developer.” The MCIT faces a challenge educating local people about the risks of copied programmes, which will need to start with the implementation of policies restricting retailers from selling susceptible equipment. If an individual or organisation falls prey to an attack, they are encouraged to contact the IT and Cyber-Protection Committee of the MCIT.
The historical mismanagement of the national education system has limited human resources development, especially in ICT. Students with sufficient financial backing went abroad, and generally remained there. However, this trend is gradually changing. U Minn Thein told OBG, “Over the last two years, salaries within the ICT sector have almost doubled, which has enabled skilled workers from Myanmar working abroad to return.” However, the increased number of more attractive salaries offered by has made retention of local staff difficult for some SMEs.
The education sector has also been bolstered by an increase in government spending that will help train future IT technicians. During military rule the education sector received on average 1.3% of the national budget, which led to the rapid decay of a system that was once regarded the best in Southeast Asia. During President U Thein Sein’s reign, however, spending was increased with his last budget on education accounting for more than 5% of total government spending, or $1.3bn.
For most developed countries, the use of ICT in education and training has become a priority. However, Myanmar still lags behind in this respect, but broadly based outreach programmes are assisting in the re-emergence of the country’s education system. Donor agencies and multinational corporations are working alongside the Ministry of Education (MoE) in an effort to use updated technology to improve teaching methods.
One of many examples is the collaboration between UNESCO, Ericsson, the UK Department for International Development and the MoE for the Empowering Women and Girls through Mobile Technology in Myanmar project. A first of its kind, this ICT education project will improve learning outcomes in literacy and numeracy for thousands of students, half of whom are marginalised girls.
The ICT for Education project is another example. Ericsson provides UNESCO with funding of about $1.4m for the project. In the initial phase, the funds will be used to connect 17 schools in the Mandalay Region. The second phase aims to connect 14 schools in the Bago Region and Mon State. Each of the schools will receive laptops, tablet computers and other support to aid the teaching process. Initiatives like these are also designed to strengthen the workforce across a variety of sectors beyond ICT. This coincides with the Myanmar Computer Federation’s emphasis on developing the country as an outsourcing centre for call centres and software development.
Until the new international connection links go live, internet disruptions will continue. Yet with the next subsea cable expected to be launched in early 2016, it is hoped that these frustrations should dissipate quickly. Myanmar’s ICT sector has pockets of excellence, but significant hurdles still need to be overcome before the local business community can capitalise fully on the digital age, particularly in the areas of education and IT security. With spending on education set to increase in the new and more open political climate, Myanmar is expecting to witness a substantial growth in the number of IT graduates. This will go a long way in deepening the national talent pool. However, until the MCIT ushers in the necessary policies to mitigate the risk of use and exposure to pirated software, businesses will have to venture further afield for legitimate software. With international players set to launch 4G technology in the not-too-distant future, and an increased interest in foreign investment, it is expected that there will be a surge in opportunities for job seekers and SMEs alike.
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